Policy

The term policy has more precise definition as compared to strategy. It has been derived from the Greek word ‘polities’ meaning citizen and Latin word ‘polities’ meaning polished, that is, to say clear. According to New Webster Dictionary, policy means “the art of manner of governing a nation, the line of conduct which rulers of a nation adopt on a particular question especially with regard to foreign countries, the principle on which any measure or course of action is based”. While these descriptions of policy relate to any field, policy in management context is defined by Weihrich and Koontz as follows: “Policies are general statements or understandings which guide or channel thinking in decision making”. Kotler has defined policy more elaborately as follows: “Policies define how the company will deal with stakeholders, employees, customers, suppliers, distributors, and other important groups. Policies narrow the range of individual discretion so that employees act consistently on important issues” We may define the policy as follows: A policy is the statement or general understanding which provides guidance in decision making to members of an organization in respect to any course of action.

Features of a policy can be identified

• A policy provides guidelines to the members of the organization for deciding a course of action and, thus, restricts their freedom of action. Policy provides and explains what a member should do rather than what he is doing. Policies, when enforced, permit prediction of roles with certainty. Since a policy provides guidelines to thinking in decision- making, it follows that it must allow some discretion; otherwise it will become a rule.
• Policy limits an area within which a decision is to be made and assures that the decision will be consistent with and contributive to objectives. A policy tends to predefine issues, avoid repeated analysis, and give a unified structure to other types of plans, thus permitting managers to delegate authority and still retaining control of action. For example, if the organization has framed a policy that higher positions in the organization will be filled by internal promotion, the managers concerned can deal with the situation in this light whenever a vacancy at higher level arises. Thus, organization gets assurance that higher positions are filled by internal members without further control.
• Policies are generally expressed in qualitative, conditional, or general way. The verbs most often used in stating policies are to maintain, to continue, to follow, to adhere, to provide, to assist, to assure, to employ, to make, to produce, or to be. Such prescriptions may be either explicit or these may be interpreted from the behavior of organization members, particularly at the top level. When such a behavior is interpreted as policy guideline, it is normally known as precedent that is what has happened in the past on a particular issue if there is no clearly specified declaration.

Policy formulation is a function of all managers in the organization because some form of guidelines for future course of action is required at every level. However, higher is the level of a manager, more important is his role in policy making. Similarly, policies may exist in all areas of the organization from major organizational policies to minor policies applicable to the smallest segment of the organization.